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Just 6% of value of farm produce sold at MSP: Can corporate control protect farmers?

By Aakriti Kanyal* 

The ongoing farmer’s protests in the borders of Delhi recently completed 100 days of struggle against the Farm Bills 2020 proposed by the Government of India. Hailed as one of the biggest people’s movements against the regime in contemporary times, the protests have been at the center of the public discourse for some time. And rightly so.
Amidst the tons of disinformation propagated by, as Chomsky would say, the agenda-setting media, the awareness raised about the farmer’s conditions and plight in the country has been sanguine. And yet still, some unheard voices have escaped the notice of the popular discourse: small and marginalized farmers. At the centre of the conversation about the bills and the farmer protests have been two issues: removal of Minimum Support Price (MSP) by making Agricultural Produce Market Committees (APMCs) redundant and the so-called privatization of agriculture.
The government’s proposal, as per Farmer’s Produce Trade & Commerce (Promotion & Facilitation) Bill, 2020 and Farmers (Empowerment & Protection) Agreement of Price Assurance & Farm Services Bill, 2020, was that the compulsion on farmers to only sell in APMCs will be taken down, opening up all sale and marketing of agricultural goods outside APMC mandis.
This would allow farmers to indulge in inter-state trade, electronic trading, better infrastructural support, and contract farming, as well as, will give an option to avoid exploitation at the hands of the middlemen. The protesting farmers fear that the increased involvement of private players and the prohibition on market fees and cess collection would make APMCs redundant and the concept of MSP will eventually vanish, leading to the market control fully in the hands of the private players.
But this is only a part of the picture. Data suggests that only 5 to 6 percent of the value of agricultural produce is sold at MSP, mainly restricted to a few states in Northern India, which coincidentally happens to be at the heart of the protests. Moreover, the majority of the agricultural output is not even sold at APMCs. The selling to private traders, money lenders, etc. is already in existence.
About 85% of the agriculture sector comprises of small and marginalized farmers. Most of them are landless labourers or hold a very small portion of land. Their livelihood is solely dependent on agriculture. Their concerns go much beyond APMCs and MSP. They struggle to merely get enough resources to make it to the end of the day, with most of them being stuck in a vicious cycle of debt. In essence, the discourse around the Farm Bills largely excludes the repercussions of these laws on this marginalized sect of the farming community.
With the advent of these bills, Prime Minister Narendra Modi aspired to double the income of the farmers by the year 2022. As the involvement of private players is usually hailed to be the holy grail of efficiency and increased income, the increased involvement has been claimed to make life easier for the farmers. But, of course, this is a quixotic dream.
Fundamentally, because at the heart of the agrarian crisis looming over the country is the farmer and farm laborer’s debt. One doesn’t need to be an expert to understand why debt is a vicious cycle, especially for marginalized farmers. For instance, in a drought-prone area such as Kalahandi, Odisha, the farmer might have already pledged their crop of 2023 to a certain moneylender, solely for basic sustenance in 2020. These instances are present in multitudes across the country.
Do the Farm Bills and the government address this issue, let alone solve it? Now, coming back to what is being termed as the privatization of agriculture, that is, increased participation of private retailers, traders, and so on. But that has already been existing. The difference is the introduction of corporate entities and contract farming. The supporters of the bill claim that this will empower farmers by the means of price discovery, increased choice of buyers, and better infrastructural amenities. But there is a problem.
To sincerely believe that all such institutions, in all their benevolence, are going to protect the farmers’ rights and ensure their welfare would be to believe in the existence of utopia for two simple reasons.
Firstly, the agriculture sector of the country suffers on many fronts. Farmers require price stability and assurance, because the circumstances can turn much worse for them. The high number of suicides exemplifies this. The entry of private players, especially corporates can make this better if one’s being hopeful, but also has the power to worsen it. Contract farming will enable control lying with a handful of these corporates that can deteriorate the bargaining power of the farmers.
This can lead to price fluctuations and manipulation, as well as create monopolies with control on price and choice of the crop in the hands of these corporates. A harrowing example of this was stated by P Sainath in an interview where he lamented the story of farmers in Kerala who switched from growing crops such as rice to vanilla, in around 2001, with the promise of spectacularly high prices by a few companies in the USA.
The eventual outcome of it was the highest number of farmer suicides in Kerala. This is perhaps an extreme instance but it shows the scale of the catastrophe that can be brought on farmers. But government has the power of regulating such instances and ensuring protection to the farmers.
Demonizing of APMC is wrong. What is in need is to strengthen that institution that has supported all kinds of farmers over the years
Secondly, the Farm Bills fail to provide legal protection to the farmers. If any clause of the contract is violated by the private entities, farmers can always approach the judiciary to demand justice. While the rich and big farmers might have the means to afford the required legal help, the small and marginalized farmers are neither literate enough nor have the means to protect themselves from such a circumstance. If one goes through the wording of Section 13 of the Farmers’ Produce Trade & Commerce Act, 2020, the ambiguity is astounding.
Moreover, Section 15 of the same act disallows farmers to approach the civil court for resolution, giving authority to a bureaucratic Conciliation Board. In light of a dispute, the farmers essentially lose the right to seek immediate and judicious redressal.
Environmental activist Prafulla Samantara commented that contract farming along with the changes in the Essential Commodities Act stands a chance to threaten the food security of India. If done on a large scale, it will curb the food diversity of the country, possibly endangering the sovereignty of the nation. Moreover, the peril of stockpiling of such commodities by corporate entities will only lead to price control in their hands.
The repercussion on the small and marginalized farmers can cost them their livelihood. A shining example has been the corporatization of agriculture in the USA. It is without a doubt that the agriculture sector in the country needs reforms. But the solution provided by the government is not solving the right problems. Even if one ignores the unjust way the bills were passed in Rajya Sabha, the basic problem is that the major stakeholders, i.e., the farmers were not a part of these proposed solutions.
Their plights vary from region to region and a one-shoe-fits-all approach makes no sense. 
Small and marginalized farmers need protection from money lenders, the unpredictability of the weather, and many other problems. Demonizing of APMC is wrong. What is in need is to strengthen that institution that has supported all kinds of farmers over the years instead of making it redundant. APMC has earned the ill-reputation due to mismanagement in procurement by the state governments. 
And one should not forget why they were introduced in the first place: to safeguard from the private retailers. Then, a price guarantee needs to be provided on paper in the bills to ensure protection to the farmers against volatility due to price manipulation and fluctuation. And lastly, it is imperative to provide the farmers with the required legal recourse to save from any exploitation by the private entities. The protests against the bills hold crucial value, not only for the future of agriculture but also to uphold the sanctity of our democracy.
The attention garnered, internationally, will hopefully help in shaping a better future for the farmers and their struggle will continue to inspire generations to come. It has also mobilized small and marginalized farmers to raise their voice. But it has to be acknowledged that there is yet, a dearth of representation in the popular discourse. The small and marginalized farmers of rural areas, tribal communities, in regions with extremely fragile weather conditions, and so on remain to be unheard. And hence, it is the government’s and our collective duty to hear them, their plights, and bring attention to them. Because only then can we hope to chart a brighter future for the agriculture sector and subsequently, the development of the country.
---
*MBA, 2019-21, Indian Institute of Management, Indore

Comments

Anonymous said…
The author makes a valid point. So well drafted and researched. I hope we get to read more from you, Aakriti. Cheers.
Anonymous said…
So well researched and drafted. The author has put in a lot of efforts of make it such an informative read. Wish to read more from you, Aakriti. Cheers.
Unknown said…
It Seems Authetic Journalism News Sense.
Anonymous said…
the author has outdated data. The same as Agriculture Minister aspirant Ashok Gulati used. The data relates to 13 - 14. Data is available as of 18 -19. based on this the 6% is a deliberate misinformation - which one needs to see in the video of Ashok Gulati - IIT Economist and Karan Thapar. The proper number for whatever it is worth is 12% and not 6%.
Why do I say "for what it is worth". The same video will tell you that the mandi story was not implemented uniformly across India. Therefore the northern states are at an advantage. The Eastern states are late starters and Nitish bhai eliminated the mandi story in 2006 and the Bihari farmer was cheated out of a decent living.
Finally it would be worth while noting that the largest supplier of wheat to the government at MSP is Madhya Pradesh. Punjab and haryan combined do not contribute more that about 40% or so.
The same is the story with paddy (2019). At that time about 9 states in India contributed to sale at MSP - all major rice growers including the poorly represented eastern states and Nitish bhai Bihar.
There is plenty of other disinformation around. This is adequate for the time being
SAMIR SARDANA said…
Linked to the Agri scam is the FCI Con Job

The FCI Con Job

No one knows what stock FCI is holding ! There are 2 types of stocks with FCI.1 is in FCI godowns and the 2nd is in the stomach of rodents (who are also stored in FCI godowns – as permanent residents).If all goes well,2 rats can produce 1000 rats in 30 days.But the genius of the GOI is infinite – as it plans to export rat meat – and so,it is a form of integrated storage – from integrated farming to integrated storage ! dindooohindoo

No one knows the proximate quantity and quality of FCI Stocks – except the rats in the FCI godowns.

So the so called prime wheat purchases by arhatiyas,is diverted to the private market and the spurious and lower grade wheat is sold to FCi as prime.The sales to the private sector is at a premium (by the arhatiyas)

Similarly,when the PDS stocks reach the POS storage yards,the prime wheat is diverted to the private market and the 2nd grade wheat is procured from the arhatiyas and fed to the poor.It is said that the rats in the FCI godowns eat the BEST wheat and so,the Indian poor eat a grade lower than rats – but they are happy that they are getting anything at all.Perhaps it is time to feed Indians – rat meat.

The Quality Con Job

The poor farmers with a debt load are ripped off by the arhatiyas – in the grading system – to sell prime as offgrades.This rip off,is then,in part, transferred to the rich farmers whose offgrades are bought as prime,and the rest of the offgrades are palmed off to the FCI as prime or sold in the private markets.It is a single digit % of the FCI stocks and aggregate purchase, and the GOI neither the means nor the IQ to track it – but it is in the Billions of USD.

The Justification of the FCI Con Job

The GOI approves of this rip off as they say that economic value addition by the private sector is better than rats eating wheat and rice in FCI Godowns.And the tragedy is that they are right.

Therefore rats in FCI godowns are better off than Indian farmers and Indisn consumers of wheat

The failure of “India”

India is a failed experiment.The Constitutional structure of India is being dismantled.The states have failed miserably on all counts.GST is proof of the fact that the GOI has reckoned after 73 years,that Indian states CANNOT manage their finances and their economies.

Draconian Indian Terror laws and census laws is proof that the entire legal and judicial architecture of India is obsolete

India is obsolete

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